Santiago Principles Self-Assessment

JSC Samruk-Kazyna

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  • Pillar 1: Legal
  • Pillar 2: Institutional
  • Pillar 3: Investment
Principle 1

1. The legal framework for the SWF should be sound and support its effective operation and the achievement of its stated objective(s).

1.1. The legal framework for the SWF should ensure legal soundness of the SWF and its transactions.

1.2. The key features of the SWF’s legal basis and structure, as well as the legal relationship between the SWF and other state bodies, should be publicly disclosed.

Joint Stock Company Sovereign Wealth Fund Samruk-Kazyna (hereinafter – the Fund) is a non-governmental legal entity in the form of a joint-stock company, which has assets owned by it on the right of private property. Thus, in relations with the state, the Fund acts as a private enterprise entity. In this regard, the principles of conducting business as an independent commercial structure are defined.

Delineation of powers of the Government of the Republic of Kazakhstan (RoK) as the Sole Shareholder and in terms of state regulation relating to the Fund governance. The Government participates in the Fund governance solely through the exercise of the powers and interests of the Sole Shareholder.

The Government provides the Fund and organizations with full operational independence and does not allow interference from the Government and public authorities in operational (current) and investment activities. The functions and rights of the shareholder must be exercised through the Board of Directors and establishment of key performance indicators.

The role of the Board of Directors in the Fund governance is increasing on an ongoing basis, with a focus on the opinion of independent directors. The Fund will strive to maintain the share of independent directors in the portfolio companies (hereafter – PCs) at the level of 50% of the composition of the Boards of Directors.

The structure of the Board of Directors composition will be formed given the requirements to the formation of the full-fledged and effective committees that are key working bodies of the Board of Directors. The Fund will support the work with the succession of the composition of the PC Board of Directors. For this purpose, high-quality work will be ensured to maintain the Fund’s talent pool for potential members of the PC Board of Directors, as well as to select and hire directors who meet the target profile.

The Fund participates in PC governance through the exercise of shareholder rights and interaction with the PC Boards of Directors, including through its representatives on the PC Boards of Directors. For all PCs, regardless of the plans and timing of the IPO, the goal is to significantly improve corporate governance practices to the level of listing requirements of leading international exchanges in terms of compliance, disclosure, transparency, procurement and other aspects of corporate governance.


*The Fund was founded in accordance with the Decree of President of the Republic of Kazakhstan dated October 13, 2008 No.669 “On some measures on competitiveness and sustainability of national economy” and with the Decree of the Government of the Republic of Kazakhstan dated October 17, 2008 No.962 “On measures on realization of the Decree of President of the Republic of Kazakhstan No.669” by merge of two joint stock companies Kazakhstan Holding for the Management of State Assets SAMRUK and Sustainable Development Fund KAZYNA. 

The Fund performs its functions in compliance with the Law of the Republic of Kazakhstan “On Sovereign Wealth Fund” (hereinafter - Law on SWF), the Law of the Republic of Kazakhstan “On Joint Stock Companies” (hereinafter – Law on JSC), the Agreement on Interaction between the Government of the Republic of Kazakhstan and the Fund preliminary approved by the Decree of the Government of the Republic of Kazakhstan dated December 14, 2012 No.1599 (hereinafter  -  Agreement on Interaction), the Fund Charter, and other respective laws of Republic of Kazakhstan.

The Government of the Republic of Kazakhstan (hereinafter – the Government of the RoK) segregates its powers of the Sole Shareholder of the Fund from its powers related to state regulatory functions .

Legal relationships between the Fund and the Government are specified in the Law on SWF, the Fund Charter, Agreement on Interaction, the Fund Corporate Governance Code and relevant legal acts. The key features of the Fund's legal basis and structure are specified in the Law on SWF.

The Fund Charter, Law on SWF, Agreement on Interaction, Corporate Governance Code are publicly disclosed at:   

Principle 6

6. The governance framework for the SWF should be sound and establish a clear and effective division of roles and responsibilities in order to facilitate accountability and operational independence in the management of the SWF to pursue its objectives.

The Fund strives to comply with the highest standards of corporate governance, since it considers this to be one of the most important conditions for high efficiency and business sustainability.

The Fund operates an efficient and transparent corporate governance system that meets international standards. The Fund’s corporate governance system is a set of processes that ensure the management and control over the Fund’s activities, as well as a system of relationships between the Sole Shareholder, the Board of Directors, the Management Board and key stakeholders.

The corporate governance system also includes the Committees of the Board of Directors, Management Board, Committees under the Management Board, Internal Audit Service, Ombudsman and the Corporate Secretary. The activities of all bodies are regulated by the legislation of the Republic of Kazakhstan, the Corporate Governance Code of the Fund, the Charter of the Fund and internal documents.

The Law on SWF sets up the following governance framework in the Fund:  

Superior Body – Sole Shareholder

Governing Body – Board of Directors 

Executive Body – Management Board 

Each level of governance has clearly determined competences and responsibilities reflected in the Law on SWF. 

According to the Law on SWF, one of the key principles of interaction between the Sole Shareholder of the Fund and the Fund is that interference by the public authorities to the operational activities of the Fund or its Portfolio Companies is prohibited except for cases provided by the laws of the Republic of Kazakhstan. 

According to the provisions of the Corporate Governance Code, the Government of RoK participates in the management of the Fund and group of the Fund only through implementation of the power of the Sole Shareholder of the Fund provided for by the Law on SWF and the Fund Charter and representation in the Board of Directors of the Fund.

Principle 18

18. The SWF’s investment policy should be clear and consistent with its defined objectives, risk tolerance, and investment strategy, as set by the owner or the governing body(ies), and be based on sound portfolio management principles.

18.1. The investment policy should guide the SWF’s financial risk exposures and the possible use of leverage.

18.2. The investment policy should address the extent to which internal and/or external investment managers are used, the range of their activities and authority, and the process by which they are selected and their performance monitored.

18.3. A description of the investment policy of the SWF should be publicly disclosed.

The Investment Policy was approved by the Board of Directors of the Fund in 2019.

The Investment Policy establishes the uniform requirements for investment operations of the Fund and has a clear objective: the investment operations of the Fund are aimed at increasing the value of the Portfolio Companies in the long term in compliance with the Law on the SWF. The Fund has implemented appropriate risk management regulated by internal documents. The Investment Policy does not give the detailed investment strategy per se, but provides the key approaches in the implementation of investment activities that takes into account the following activities: strategic planning, corporate governance, the medium-term planning, risk management, investor relations, and process monitoring.

The main purpose of the policy is to define (1) the investment principles of the Fund, as well as the main provisions, (2) the management of the investment portfolio of the Fund.

The investment policy establishes uniform principles for the investment activities of the Fund: the principle of commercial expediency, the principle of "yellow pages" when investing in the Republic of Kazakhstan, the principle of responsible investment and a long-term investment horizon.

The Fund carries out proper management of the portfolio of assets and projects, which is regulated by internal documents. The goal of portfolio management is to increase returns and reduce portfolio risk by diversifying and balancing the portfolio. This goal is achieved through the following approaches:

• formation of a holistic view of the portfolio of assets and/or investment projects for the implementation of strategic goals, subject to limited resources;

• careful selection, prioritization, reallocation of available resources in order to select investments that are most suitable for the needs of the portfolio, as well as exit from investments, in accordance with the Fund's strategic goals and priorities and market opportunities;

• Formation of an optimal portfolio of assets/projects, taking into account prioritization, availability of funding sources and level of profitability, as well as achieving a balance between short-term and long-term projects, between project risks and possible income from their implementation;

• Analysis of portfolio efficiency and search for ways to improve it.


Fund's asset portfolio management tools

The Fund adheres to a conservative approach to risk management and conducts analysis and proper management of investment risks within the framework of the Corporate Risk Management System (CRMS) in order to use potential opportunities and mitigate events or circumstances that may adversely affect the Fund's portfolio.

The Fund carries out its investment activities within the limits of the Risk appetite established by the Board of Directors of the Fund in accordance with the internal documents of the Fund regulating risk management.

In accordance with the Corporate Governance Code, the Fund's corporate governance system ensures proper management and control over the activities of portfolio companies and is aimed at long-term value growth and sustainable development.

The Fund is aware of its responsibility and seeks to contribute to the development of society by supporting national economic development programs that include elements of environmental, social and governance principles (ESG principles), as well as sustainable development plans.

The investment policy of the Fund is not a public document. However, the main principles and guidelines of the Investment Policy are disclosed in the Fund's Development Strategy, and the mechanisms for direct, financial and strategic investments are reflected on the Fund's website.

Portfolio diversification and entry into new redistributions will allow creating a stable dynamics of productivity growth. In this regard, the Fund will conduct an analysis to find the most promising markets on an ongoing basis.

The Fund intends to participate in the creation of new industries with a multiplicative economic effect and high added value. A diversified portfolio structure will reduce income volatility and minimize risks.